Did you know…how you hold title determines where your interest in the property goes at your death? Many homeowners don’t think about how to hold title. Some don’t even realize there are options, but we don’t want that to be you.
An owner has the right to mortgage, sell or otherwise transfer his own interest in the property without consent of the others. You can hold title in one of three ways:
- solely in your name
- as tenants in common
- or as tenants in common with right of survivorship (joint tenancy)
Title basics you should know
- Sole ownership is just what it sounds like: You hold the title in your name alone, even if others are on the mortgage with you.
- When two or more people or entities (corporations, partnerships, LLCs, or trusts, for example) take title to real property as tenants in common, each co-owner has an interest in the property and it can be transferred by sale, gift, will, or inheritance.
Tenancy in common is presumed in Colorado law, unless joint tenancy is expressly stated in the deed.
- Joint tenancy is simply tenancy in common with the right of survivorship.Tenancy in common is presumed in Colorado law, unless joint tenancy is expressly stated in the deed.
The right of survivorship means that you and I own the property together, and if one of us dies, the other gets it without the property passing through probate.
The Real World
If you’re married and want your interest to pass to your spouse upon your death, joint tenancy may be the best solution. But there are considerations…
Maybe you or your husband have credit issues, so you might not want the person with debts to be on the title at all.
What if one spouse has a high-liability occupation. If one of you is a doctor or lawyer with the risk of malpractice claims, you may want the not-at-risk spouse to own the property. Then the target of potential lawsuits has no legal interest that can be pursued by creditors.
Joint tenancy may also be unwise if you have a complicated family history. Perhaps you’re married, but not for the first time, and you have children from a previous marriage. You may want to title your home as tenants in common so that when you pass, your interest goes to the beneficiaries of your estate. That reasoning may also be sound if you’re divorced with children and own a home with a new partner.
While we can give you this kind of basic information about the difference between the two ways of holding title, we cannot give you advice about which option to choose. Some circumstances where you might want to consult an attorney about this matter include, but are not limited to, cases where you have prior marriages, children from prior marriages, pre-nuptial agreements, big differences in ages, any situation where there is a co-signer, if you are involved in a lawsuit or where you have complex estate planning issues.
Even though you have indicated in the purchase contract how you plan to hold title, you can change this prior to closing. Let your agent know if you need to rethink this matter so that they can notify the title company to use the correct deed for the property at the time of closing.